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USPS Posts $3.3B Quarterly Loss

Growth in shipping services can't offset drop in mail service.

Struggling to reduce costs and regain profitability, the U.S. Postal Service announced a net loss of $3.3 billion in its fiscal first quarter of 2012.

The USPS warned it will default on its retiree health benefits pre-payments to the federal government and reach its $15 billion debt ceiling by the fall if Congress doesn’t act to give the postal service more flexibility in how it may operate.

Postmaster General and CEO Patrick Donahoe is pushing a plan to cut $20 billion worth of annual expenses by 2015, which calls for a rework of the postal network, workforce reductions and a restructured health care program. The USPS has also proposed a five-day delivery schedule to slash operating costs, but this controversial change would require federal legislation.

Technology’s effect

The USPS cites the “continuing transition to electronic alternatives” as a significant factor in the decline in traditional mail volume. Since the peak in 2006, First Class Mail revenue has declined nearly 15 percent and volume has declined 25 percent, USPS reports.

Though the busy holiday season helped its competitive Shipping Services business grow 7 percent over the year-ago quarter, to $2.8 billion, the growth wasn’t enough to offset a $650-million drop in First Class and Standard mail services.

Total mail volume of 43.7 billion pieces during the first quarter was a 6-percent decrease compared to the same quarter of 2011.

About the author

Crista Souza
Crista Souza is founding editor of TheOnlineSeller.com. A journalism graduate of San Jose State University, she spent 13 years as a business and technology reporter in Silicon Valley. Crista has been writing about B2C and C2C ecommerce since 2008. Opinions expressed here may not be shared by The Online Seller and/or its principals.

  • Troy

    The postal unions, much like all other unions, are killing the post office.

  • Me

    Another government run agency going bankrupt…



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